Title: Effect of salvage value on a two-warehouse inventory model for deteriorating items with stock-dependent demand rate and partial backlogging

Authors: Neeraj Kumar; S.R. Singh

Addresses: Department of Applied Sciences and Humanities, IIMT Engineering College, Meerut (UP), 250001, India ' Department of Mathematics, D.N. (PG) College, Meerut (UP), 250001, India

Abstract: In this study, an EOQ model with two level of storage is developed when units in inventory deteriorate at a constant rate and demand is stock dependent. The salvage value is allied to deteriorated units. When stock level exceeds the capability of own warehouse (OW), it is to be kept in additional rented warehouse (RW) with higher holding cost than OW. The inventory held in RW is transferred to OW in continuous release pattern till the stock in RW gets exhausted. In developing the model it is assumed that shortages are allowed and partially backlogged. An algorithm is given to find the optimal solution. The sensitivity analysis is voted for out to analyse the effect of critical parameters on optimal solution by using MATHEMATICA5.2 for the feasibility and applicability of our model.

Keywords: two-warehouse systems; salvage value; stock-dependent demand; partial backlogging; inventory modelling; deteriorating items; EOQ; economic order quantity.

DOI: 10.1504/IJOR.2014.060415

International Journal of Operational Research, 2014 Vol.19 No.4, pp.479 - 496

Published online: 17 Jun 2014 *

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